TSMC Corporation is considering selling one of its old wafer fabrication machines. The machine, purchased for ($3,000,000)
Question:
TSMC Corporation is considering selling one of its old wafer fabrication machines. The machine, purchased for \($3,000,000\) 5 years ago, had an expected life of 10 years and an expected salvage value of zero. Assume TSMC uses simplified straight-line depreciation (depreciation of \($300,000\) per year) and could sell this old machine for \($2,100,000.\) Also assume TSMC has an 18 percent marginal tax rate.
a. What would be the taxes associated with this sale?
b. If the old machine were sold for \($1,900,000,\) what would be the taxes associated with this sale?
c. If the old machine were sold for \($1,500,000,\) what would be the taxes associated with this sale?
d. If the old machine were sold for \($1,350,000,\) what would be the taxes associated with this sale?
Step by Step Answer:
Foundations Of Finance
ISBN: 9781292318738
10th Global Edition
Authors: Arthur Keown, John Martin, J. Petty